Client Based Research

Proposal for Day Lewis

PLC

Presented on February 13, 2015

TEAM: Calum Mackenzie

Md Naiem Miah Senira Senarathne Sajiv Karunanayake

Project Supervisor:

Dr Aaron Van KlytonActing Director of the MA/MBA IB ProgrammeUniversity of Greenwich, Business School

Email : va21@gre.ac.uk

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CONTENTSIntroduction to Research

East and West African market entry objectives

Methodology in selecting countries in the East & West African markets

Which would be the ideal product strategy for Day Lewis in Sub-Saharan Africa?

DRAFT OF RESEARCH INSTRUMENTS

Expected Findings

Country Analysis

Strategic Appraisal

Market Data and Partnering Options

BIBLIOGRAPHY

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Introduction to Research

The following proposal for the client, Day Lewis, will predominantly aim to provide a comprehensive overview of

how the researchers are going to answer the problem at hand. Essentially Day Lewis is to launch two products into

two Sub-Saharan African markets in the West and East regions. The client aims to expand their market share in the

pharmaceutical industry, with possibly the UK market’s high saturation being a strong influential factor. This will

form the basis for the research. Now, in order to effectively arbitrate the most viable countries to enter, within East

and West Africa, the researchers will look at key variables in order to determine the most ‘attractive’ markets to enter,

all of which will be explained through this proposal. Essentially the aim is to accommodate Day Lewis with the most

potentially profitable markets to enter. Next, the proposal will address the methods in which are going to be used in

deciding the most appropriate strategy, i.e. whether to use over the counter or prescription. The newly launched

products will also require effective marketing strategies, such as how to brand, distribute and advertise the products

for the new markets, taking into account various fundamental elements such as market segmentation, i.e.

demographics such as age, sex, income, job type. The proposal will elaborate on the aspects of marketing, whilst

justifying the reasons for the selection in how to best market Day Lewis’ products.

East and West African market entry objectives

This part of the proposal will address how the researcher is going to determine the most appropriate methods and

criteria in selecting the most viable and ultimately, profitable East & West African market for Day Lewis to enter.

Although the subject of entering two markets is separate, it is important for the researcher to assert that the objectives

for determining the most viable markets for Day Lewis to enter will, in effect, be the same. This is justified in that the

objectives for determining the most suitable and ultimately successful markets for Day Lewis to enter, will be

consistent throughout in the selection of a country from the East African market and similarly, with the West African

market. This is also to ensure two comparable relevant measures. Day Lewis are essentially entering both markets

with the same products and although the country attractiveness sheet data results will arguably be different for the

selection of an East and West African market, the later objectives presented, are largely broad, as they have taken into

consideration from well carried out research, the most significant factors for companies of any nature looking to

expand internationally, and to do it in such a way as to increase market share and competitive advantage.

The research objectives to be addressed will provide the relevant information and data statistics that are required to

address the question of which West African market to enter. Careful consideration has gone into devising these

objectives so that the most accurate decision is formulated:

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To determine the market which is most consistent with Day Lewis’ brand strategy?

This is important because it will mean that the chosen country will essentially relate more to the Day Lewis

brand. However, the researcher cannot neglect that the East & West African markets will inevitably be a lot

different and not homogeneous with the UK market.

To determine the best criteria to use in order to choose the most feasible market to enter i.e., pull

factors to determine the attractiveness of market.

Push factors are the unattractive market conditions that drive companies away from their domestic market.

Examples include: Poor economic conditions, low growth potential, negative demographic trends and, though

not exhaustive, highly competitive environments. These will hold relevance in the sense that they will help

address Day Lewis’ their motivation for internationalizing into other markets. Therefore, a more

comprehensive and analytical perspective will be asserted in abstaining from a East & West African market

that does not coincide with Day Lewis’ goals.

In contrast, pull-factors are factors, which constitute towards companies making decisions to leave expand

their operations, i.e. export. Examples include, stable political structures, good economic conditions,

developing markets, favorable exchange rates, and homogeneous cultural environments. These will arguably

form the basis for Day Lewis ‘market attraction analysis’ in determining the most profitable West African

market to enter. (Hamilton and Webster, 2012) expand on why economic factors are significant for companies

in their quest for growth through penetration of additional markets, outside of domestic operation. These

authors concede that in many modern industries, the scale of investment needed for research and development

(R&D) and production facilities, can mean that the size of a single domestic market is not sufficient to support

that industry. By exporting to additional markets, outside the domestic one, companies are increasing potential

for growth.

Which barriers are most threatening to Day Lewis’ successful penetration into the East and West

African markets?

Lynch, (2002), a credible academic, asserts that the main barriers to entry for a business trying to

expand or penetrate a new market are Competition, economies of scale, saturation, access to

distribution channels, brand differentiation, For example, Porter, (2004) asserts in his Five forces

model, that some markets are more competitive than others. He mentioned that there will be higher

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competitive rivalry, for example, when it is difficult to differentiate a product. He made reference to

the pharmaceutical industry specifically, stating that products of this nature will be hard to

differentiate, and will therefore be heavily reliant on competing on the basis of cost. Further cultural

barriers are arguably one of the largest barriers for Day Lewis to contend with. Knowing the barriers of the

market will help Day Lewis to determine the least attractive market to enter. Evidently, though, even the most

‘attractive’ market will have barriers to entry, especially as Day Lewis is new in the West African market.

This needs to have careful consideration.

How will saturation/competition influence attractiveness of Day Lewis’ products?

The researcher is aware that Day Lewis wants to expand their business on one of the premises that the UK

pharmaceutical market is highly saturated. Therefore, consideration will go into avoiding countries with high

market saturation. However, this factor will not be too influential, as the sales in the West and East African

markets will, in effect, be subsidiary to the overall business.

What will be the most suitable market entry modes?

To expand into foreign markets, Day Lewis needs to decide which mode could be suitable to enter a market

among exporting, licensing, joint venture and direct investment (Bernard et al, 2003; Melitz, 2003). This

research will focus only on exporting and joint ventures because Day Lewis has revealed plans to export from

the home country to the host country and collaborate with local retailer or agents. Exporting is a well-

established and traditional market entry mode to reach international market that directs sale of domestic

products or services in another country (Helpmen, 2012; Elhanan, 2013). Some researchers believe that joint

ventures are more effective than exporting owing to reduced investment costs, where combined resources of

two companies and overcomes ownership restrictions and cultural distance (Aitken and Harrison, 2010;

Asiedu and Esfahanin, 2012). On the other hand, exporting is speedy method of entry, minimizes risk and

investment, and maximises scale using existing facilities (Helpmen, E. et al 2011; Horn & Persson 2013) but

there are some issues such as trade barriers and tariffs, transport cost, limited right to use of local information

and company views as a foreigner (Bertrand, el al 2007; Girma, el al 2009).

Methodology in selecting countries the East & West African markets

The methodology will effectively address how exactly the researcher is going to answer the objectives of this

proposition. Cottrell, (2014) contended that the types of research chosen should directly coincide with the subject and

the question being addressed. For example, what is the study aiming to achieve ultimately? Considering one of the

aims of this study is to determine the most suitably compatible market in East and West Africa, it is arguably a viable

option to use both Qualitative research and quantitative methods. This is to provide a sufficient scope for research.

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The researcher will not neglect the importance and the contribution in which qualitative research provides. Naoum,

(2012) for example asserts that collections of statistics and number crunching are not the answer to understanding

meanings, beliefs and experience, which are better understood through qualitative data. This is because the entering of

a new and somewhat unfamiliar foreign market will require additional information that goes beyond what data and

statistics will offer. Day Lewis, for example, require the most viable market to enter, therefore data collection has to

go beyond that of what quantitative research will offer in order to determine which market, in the West African market

to enter. Further, entering the West/East African markets will not be homogeneous with Day Lewis’ market in Britain,

therefore, an understanding of the East/West African market’s beliefs, values and experience is imperative and this

must be carried out through qualitative research. Elements such as culture, need to be considered, given that the West

and East African markets will largely contrast in terms of their culture with other markets in which Day Lewis

operates in. Moore, Bruce and Birtwistle, (2004) assert that Culture, values and beliefs are very significant factors that

must be considered in entering a new market. On this basis, the researcher will carry out interviews with

representatives of the ministry of health in order to address ‘gaps’ that have not been answered sufficiently from the

secondary data.

On the other hand, the researcher must not ignore the value in which quantitative data will offer. Data statistics such as

population size, household income, and demographic variables, such as age, sex, lifestyle- (health statistics- i.e.

highest rate of diabetes in the country), market saturation, consumer behavior and education will all be valuable

knowledge assets in determining a suitable market. These factors are essentially criteria that form a ‘country

attractiveness analyses’.The researcher importantly needs to state that certain criteria will take priority over others.

Population size for instance could take 4/10 to represent its significance in research relevance; in contrast market

saturation could take 8/10. On this basis, then, the researcher will consider market saturation as a more significant

selection criterion in selecting the most feasible East/West African market to enter. Further, there are many criteria to

select from; however, it is in the researcher’s best interest to choose the most viable ones, so that the criteria selected

provide the basis for selecting the most appropriate market to enter in East/West Africa. Day Lewis, for example have

already demonstrated the concept of priority when it comes to selecting the most ‘attractive’ factors in penetrating a

foreign market.

Day Lewis has clearly stated that they wish to abstain from entering the Nigerian market. The Nigerian market is very

highly populated, which is considered a ‘potentially’ attractive criteria on which to select a country to enter, however,

Day Lewis’ decision of not to enter the Nigerian market, clearly demonstrates how certain are not as significant as

others. Day Lewis’ decision to abstain from entering the Nigerian market was arguably based upon the uncertainty of

this market and the high saturation levels of the pharmaceutical industry. So the choice upon which market to enter

based upon the country attractiveness sheet, is largely contextual and based upon the nature of the business, whilst

considering the macro environment, i.e. the competition, technological factors, social factors and political factors.

These variables will essentially form the foundation for the research, with the qualitative research methods

‘triangulating’ the gaps in what the quantitative data does not find. The above variables objectively provide the most

significant information for initial market entry. Alexander, (2009) determines, for example, that a large population 6

offers increased opportunity for international traders. This essentially is primary research. ‘Primary research delivers

more specific results than secondary research, which is an especially important consideration when you're launching a

new product or service.’ Subjective interpretation of this observation, suggests that the need to be specific in the

entering of a new market for Day Lewis stems from limiting risk and ambiguity. Entering foreign markets is arguably

a very risky endeavor for even the most lucrative company. Variables that will be explored will primarily therefore,

assess demographics, geographic, socio-graphics and psychographics elements. On the contrary, the researcher will

take into account the need to go beyond the ‘drivers of international expansion’, as Alexander, (2009) so proclaims in

his works. For example, a positive social environment and a high population, are indeed ‘drivers of international

expansion’, however, one driver will take importance over another, depending on the nature of the business. Therefore

the researcher will acknowledge the foundation literature, but also use intuition and well-calculated research methods

to make the ‘right’ decision to coincide with the pharmaceutical industry, and more specifically Day Lewis’

requirements as a company to place them in a more competitive position within their market.

Which would be the ideal product strategy for Day Lewis in Sub-Saharan Africa?

DESIGN: The research design plays a significant role, when attempting to answer the research question at hand

(Cargan, 2007). Having said that, a balance between use of quantitative and qualitative methods of research; is

imperative for a steady research design Pickard (2007). While qualitative studies allow researchers to explore

behaviours, perceptions, feelings and experiences of a situation in depth; on the other hand quantitative methods

incorporate numerical data to assess a situation (Hantrais, 2009). The research design will aim to discover current

trends in specific markets, shifts in trends in those markets and the how these regions compare to global norms; this

would also involve gathering numerical data relevant to past performance and changing performance trends of the

relevant strategies in the selected markets. This design was chosen in order to facilitate the precise actions and aims in

this study.

DATA COLLECTION: A key set of data needed are historical data in the Sub-Saharan region for both classes (OTC

& Rx).This data will be collected from healthcare information and analytics databases. These data sources were

selected by the recommendation of relevant peer reviewed articles. However, further validation of this data will be

done through a questionnaire which will collect 500 responses from consumers on their inclinations towards OTC and

Rx drugs, in order to increase the response rate the questionnaire would be handed outside pharmacies and drug

retailers, this would give an updated view of consumer sensitivity.

Moving on the study will go on to collect data on multinational firms already operating in the market (e.g., GSK,

Pfizer) through annual reports and other publicly available sources, this information will enable to understand the

stance of top competing firms. Specific attention will be given to competitor specific variables such as product

strategy, internationalization experience, country of origin, entry timing (Wrona and Trąpczyński, 2012). Further data

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from competing brands from selected products (Paracetamol, Metformin) from the specified data sources will aid in

distinguishing revenue patterns and current market condition with regards to those specific products.

DRAFT OF RESEARCH INSTRUMENTS

PRIMARY DATA: The following questions will be posed to gather consumer sensitivities towards OTC

and Rx drugs. The first part of the questionnaire will identify the demographics of the respondents; this will

include gender and age. Responses to gender are, male(1) and female(2); and responses to age range from

18-24(1) to 65+(4). The second part of the questionnaire will contain statements, where the responses to

questions will range from strongly disagree (1) to strongly agree (5). This data will be analysed using

structural equation modelling (factor analysis). Some examples of the statements follows:

● The pharmacist is a good source of information about minor medical problem

● I find prescribed pharmaceutical drugs to be of good value, drugs to relieve minor medical problem

are important to me,

● I believe that only prescribed drugs will help relieve medical problems,

● I find OTC drugs less effective,

● I find OTC drugs to be of good value, advertisement assist me when purchasing OTC drugs, for

minor medical conditions drugs bought over the counter are as effective as drugs prescribed by the

doctor

The design of this questionnaire has been mainly influenced by the location where the survey will be

conducted. The strategy is to use networking through local pharmacists in order to collect the data. This

may need to be coordinated with the client. Also, the Likert scale (1-5) approach is useful in this context

because respondents may hesitate to participate if the questionnaire includes descriptive answers, which

would be time consuming. The current design encourages respondents to participate in the survey.

SECONDARY DATA: Data sources that are going to be used in secondary data collection are as follows;

IMS health, Scrip Intelligence, IRI, GSK, Pfizer. Through IMS MIDAS data related to current sales volume

of both OTC and Rx markets, market shares of current key players in the markets; and growing and

declining trends will be collected. The database houses information from more than 100 countries and

captures more than a 95% of the global industry, data are gathered either at the point of sale to pharmacies

or at the point of sale to consumers. Data collected through Scrip Intelligence will provide an expert opinion

of market trends, as a leading source of pharmaceutical industry news and strategic analysis, the data is

sourced by experienced writers and analysts based around the globe (scrip intelligence, 2014). The database

covers all aspects of the industry from small biotech start-ups to large multinational corporations. Data

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collected through IRI will provide an expert view sales and marketing trends in the two markets (OTC &

Rx).

Expected Findings

The research would be focused on collecting data in relation to three different substantive categorise in order to

effectively cater to the above mentioned objectives.

Country Analysis

An in-depth country attractiveness analysis would be carried out to grade and identify the best country for the market

entry out of a shortlisted set of countries from an initial filtration. This would ensure that the initial steps of the market

development plan are a success. The population, economic conditions, demographics, culture and the level of

dependability on British medicine and pharmaceuticals would be among the areas of high focus to obtain the

information.In addition to those the countries legislations, the registering process and the requirements to bring the

products into the market, would be of high focus, among other factors such as the process of exporting and the entry

barriers for the selected countries.

Strategic Appraisal

An effective strategy is an essential to successfully launch the product; therefore high focus should be placed on

effectively identifying the best strategic options through a strategic appraisal. The best options for the strategic

decisions would be well facilitated through information on successful pharmaceutical companies in the selected

country and the entry methods they’ve used (Sub Saharan pharmaceutical market is dominated by foreign products).

The expectations are that effective information on competitors’ growth plans and developments would enable us to set

reasonable goals and targets in positioning in the market.The method of positioning and bringing the products to the

consumers effectively and successfully would require us to gather information on the external factors to the industry

that would have effects on the business. An example would be the level of corruption in the country, black markets for

pharmaceuticals. In addition to this it is expected that the research would enable us to gather information on any

government subsidies or foreign aid provided for pharmaceuticals and healthcare in the specific country as this have a

direct impact on the business.

Market Data and Partnering Options

The specified research options are focused at deriving the information about consumers, consumer perceptions and the

best methods and strategies that can be applied to effectively position the client’s pharmaceutical products in the

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selected sub Saharan markets. The OTC would require a specific marketing strategy focusing on consumers as this

would have a considerably lower switching cost than a prescription drug specified by a medical professional. The

research is focused at deriving information with regard to the supply chains and existing marketing practices adopted

by established pharmaceutical companies in the specific regions. The research including primary data from medical

professionals such as Doctors and Pharmacists would be focused on gaining information with regard to the level of

influence and the consumer adherence to the specified medicines. General networking and information gathering

brought to us that some sub-Saharan pharmaceutical markets are barely regularised or urbanised enough for the

consumers to depend on medical advice. The focused interview and discussions with potential partners would focus

on identifying the legislative requirements for a partnering agreement and also the business related information for the

partnership (share of profits and general credit terms for operations in the market, the level of investment and the

market reach, Etc.)The researcher would also seek for opportunities to gain unofficial market information and to

verify the level of dependability on the information from the published sources.

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pp. 295-315.

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